This week will see an OPEC meeting that may provide for some entertainment and major decisions from the powerful group. On Wednesday in Vienna, OPEC will have a lot to talk about. With Libya’s crude still mostly offline, volatility on global markets, and the Western world looking to OPEC members for mercy with production increases, the group will need to find answers to very divisive problems and opportunities facing it.
Writing in Arab News, Syed Rashid Husain notes that the “stage is set for a highly politicized gathering” for OPEC, and a “number of burning items are on the table.” Along with all of the major issues facing OPEC, the Islamic Republic of Iran will assume the group’s rotating presidency this year.
Oil climbed to near record highs this spring as unrest in Libya and uncertainty about other oil producers roiled markets. Evidence is mounting that speculators have contributed to this rise, too. Meanwhile, as the price has climbed, so too has production above allotments by the 11 OPEC members bound by quotas, averaging 1.5 million barrels a day, according to the Wall Street Journal. The WSJ also reports that “Because OPEC—and mainly Saudi Arabia—isn’t pumping at full capacity, the group has sway over oil prices. Taken together, the 12 countries that comprise OPEC are producing crude at an estimated 29.1 million barrels a day, accounting for roughly a third of world output.”
We’ve suggested here on Arabianomics that oil prices might not climb higher again to the levels the world saw earlier this year, and may even track lower to the so-called “comfort zone” established by Saudi energy officials at $70-$80 a barrel. This depends on a lot of factors, many out of the 12-member OPEC’s reach this week in Vienna. However, major decisions will be made at this meeting that will impact the future of the oil industry – and OPEC.